. Ronald's Outboard Motor Manufacturing plant production function is Ronald is investigating a new outboard motor manufacturing technique. Ronald believes that if he adopts the new technique, his production function for outboard motors will become: Given that Ronald uses 4 units of machine hours, sketch his production function with the old technique and the new technique as he increases labor hours. With the new technique, do labor hours contribute more to production?
Solution:
The slope of the new production function is steeper for all labor uses. This implies the marginal product of labor is higher for the new technique. This means that labor hours are contributing at a higher rate for the new technique.
easy 74.Wally describes himself as a resilient fundamentalist when it comes to making investments in the stock market. At the moment, Wally uses only periodicals from the library when analyzing corporate fundamentals. The number of firms he can analyze in a day is given by the function: where L is the number of hours a day he works. Sketch Wally's total number of firms analyzed as he increases his hours of work. If Wally begins using internet sources to learn about corporate fundamentals, the number of firms he can analyze in a day is given by the function: Sketch Wally's total number of firms analyzed as he increases his hours of work and uses the internet.
Solution:
The production function for Cogswell Cogs is K represents the number of robot hours used in the production process while L represents the number of labor hours. The marginal productivity of a labor hour is Fill in the empty columns in the table below. Use the information in the table to sketch Cogswell's marginal product of labor curve while robot hours are fixed at 9.
Output / Robot Hours / Labor Hours /9 / 8
9 / 27
9 / 64
9 / 125
Solution:
Output / Robot Hours / Labor Hours /6 / 9 / 8 / 0.25
9 / 9 / 27 / 0.11
12 / 9 / 64 / 0.063
15 / 9 / 125 / 0.04
A sketch of the marginal product of labor is
Bridget's Brewery production function is given by where K is the number of vats she uses and L is the number of labor hours. Does this production process exhibit increasing, constant or decreasing returns to scale? Holding the number of vats constant at 4, is the marginal product of labor increasing, constant or decreasing as more labor is used?
Solution:Since we know the production process exhibits constant returns to scale. Holding the number of vats constant at 4 will still result in a downward sloping marginal product of labor curve. That is the marginal product of labor decreases as more labor is used.
moderate 87.Michael's Dairy farm production function is given by where K is the number of machine milkers and L is the amount of labor hours he uses. Does this production function exhibit increasing, constant or decreasing returns to scale? Holding the number of machine milkers constant at 16, is the marginal product of labor increasing, constant or decreasing as more labor is used?
Solution:Since we know the production process exhibits decreasing returns to scale. Holding the number of machine milers constant at 16 will still result in a downward sloping marginal product of labor curve. That is, the marginal product of labor decreases as more labor is used.